Friday, August 3, 2007

Market Update

The Return of the Loan Contingency?

In the East Bay's go-go-market of the last few years, loan approvals happened without a second thought. And, since buyers have to be competitive in that market climate, they often dropped the loan contingency from their offers. Well, the credit market is tightening up--especially with American Home Mortgage and others like them closing their doors--and loans won't be so easy to come by.

I think this means we'll start seeing the return of the loan contingency. Buyers are going to have to cover themselves, as in the past, when it comes to getting their loans funded. Firms like AHM stopped funding new loans last week, and then closed their doors. What happened to buyers who were ready to close escrow last week, but their lender disappeared on them? I hope they had loan contingencies in place.

We'll also start to see a return to conforming loans--aka those loans that conform to federal Fannie Mae and Freddie Mac standards--and fewer and fewer jumbo loans. I also think we might start seeing more seller financing, which could be very interesting. What do you think? Comment below or drop me a line at

Monday, July 30, 2007

Financial Tips

Tips for Improving Your FICO Score

Like it or not, your ability to get a good home loan is highly dependent on your FICO score. And, many people don't realize that a good FICO score has nothing to do with how much money you have. It is a measure of how well you handle credit and pay back those companies you borrow money from.
I once knew a very well-off young couple. They were newly married and ready to buy a home, but their FICO score was in the basement. Why? Because they had always paid cash for everything and never used any credit cards or loans. After spending a year building a credit history, they finally got a good FICO score, a good loan, and a lovely first home.

There are lots of great tips to improving your credit score, and everyone's needs are different. If you need to improve your FICO score, please give me a call and I will recommend several reliable mortgage brokers who know a lot about improving your credit profile.

But, in the meantime, here are several great tips that should apply to most people:

1. Get a copy of your credit report from all three credit bureaus and review it for accuracy. It is estimated that 60-70% of credit reports contain inaccuracies.

2. Pay your credit cards on time, every month, even if it is the minimum payment. Lenders are looking for a strong history of paying your debts in a timely manner.

3. Use your credit cards to build a profile, but don't max them out. Most advisors recommmend using just 25-40% of your credit limit. Lenders are looking for responsible use of credit.

4. Be patient. It can take 6-12 months to see a strong improvement in your credit score.

For a more complete look at your FICO score, visit the Fair Isaac website. And, feel free to contact me anytime to discuss FICO scores and lending. I can be reached at 510-547-5970 x57 or

(photo courtesy of